Tuesday, 3 June 2014

Europe's Commissioned failings

We all know when we have got under someone else's skin. The barbs comes forth, the anger heightens, faces redden and ludicrous accusations are made. One only has to watch say Nick Clegg debate with Nigel Farage to see in live action how this works.

With the EU the attack is the same, but of course faceless, matching the EU's preferred method of Governance. The recent elections presented the EU with a choice, with Centre-Right parties being the biggest leaders in the Parliament they came up with a wheeze to 'select' (i.e. no elect) a right-wing leader. Being the EU it watches the 'Managed Deomcracy' of Russia and China's political management and decided that a Federalist candidate should be found for both right and left, to ensure the 'correct' person was selected.

Thus we have the name Jean-Claude Junker to look forward to as President of Europe. the only small consolation being how much it must annoy Tony Blair, so craven in handing over the UK rebate and yet never to get his bauble.

Our valiant Prime Minister has had words with Chancellor Merkel about this stitch up and she has ignored him. Quite right too, the Eurozone is dead without fiscal union and fiscal union requires closer political union. The only way to do this is more Federalism - so Merkel is quite right to back her candidate to progress this.

Then the Commission gets involved with a set of recommendations for 2014 macroeconomic policy recommendations. They are for every Country but the UK's ones are more overly political than most. Effectively the UK Government is criticised for a number of flagship programmes and changes rather than for its overall position. For example, much is made of the minimal support Help to Buy has made and for the introduction of Universal Credit.

This is how the EU strikes with its faceless bureaucrats. Having said that we should not forget the chilling overall picture of the UK economic position. Debt has doubled since 2007. The deficit is still above 6% even though we are into a second year of recovery - tax rises recommend by the Commission are perhaps the wrong answer to the right questions. The UK is utterly unprepared for next recession which could occur from the end of 2015 onwards. The Country could not cope with a new recession when the deficit was already high and national debt was near 100% of GDP.

The UK desperate needs to reduce Government spend and the cost of doing business and increasingly I see leaving the EU as a way of doing this in the long-term. They have made it quite clear that Britain is not necessary for them now in any event.

18 comments:

MyUsualName
said...

1. I would disagree with the idea that 'help to buy' (cf. help to sell) has had no effect on the market. Also the introduction of new mortgage rules/assessment brought some panic to the market just like the 1980s. They're gonna keep slapping the sauce bottle but at some point this shortcut to jazzing up GDP figures is gonna fail. This is governance by sleight of hand and desperation. Anyone thinking the govt subbing 20% of the price of anything is a good thing for the market is a mug.

2. costs of business. I registered a company name for a pet project last year; I'll get round to it sometime. The company is dormant, never used.I must be getting 10 pieces of mail per month from HMRC for various whatnots. Madness.

The only way out of this fiscal bind is to stabilize the tax base over the longer term with a LVT; as the EU hinted at this morning. It wouldnt surprise me that help to sell was the cue for the establishment to offload potential liabilities at goosed prices.

MUN - good comments. I don't agree with help to buy either and your points are correct. However, it is not hel to buy that pushed the markets - it is cheap interest rates and overseas investment into London. neither of which too much can be done about. HtB is a poster child for baiting only. (LVT is a terrible idea and anyone who belives in it is a communist by the way! It is an end to property rights which is the very basis of our society)

Ossian - The EU parliament is useless with less power than the house of lords. The idea of UKIP MEP's is not to reform, it is to campaign to leave.

The EU point about council tax being too low on high end properties is a good one. Surely it's about time this was fixed and empty properties too. Is council tax a tax on property or a tax on occupancy? Since it was introduced it has swung too far in favour of the rich living in mansions. Before anyone mentions "widows in mansions" I've never understood why it's sacrosanct that someone should be able to live as they please until they drop. If it helps to get people to downsize as they get older then that's surely "a good thing".

Blair is never going to get the job but I think the reason he always comes up is because the EU desperately needs people like him to fulfil their fantasies.

There's two justifications I hear for the EU. The first is that enlightened technocrats can protect us from dumb national politicians which is clearly a load of bullshit but seems to be a popular meme in Germany and further east. The second is that being in a bloc allows Europe to compete globally which is the argument Europhiles use in the UK.

But the EU is never going to help the UK globally if the EU constantly appoints politicians from tiny countries with less experience than a town mayor. Somewhere like Estonia might think this is a good idea but it is of no benefit to experienced countries like the UK or France.

If the president is also meant to be an icon for all of Europe then he needs to be able to communicate with all of Europe. Which let's face it means being able to do slick speeches and TV interviews in English.

The only member state that still produces the politicians the EU needs for its superpower fantasy is the UK and maybe France. They're never going to let us take over so the place so the EU's global ambitions are as doomed as its military ones.

I doubt it Dem, events can change but even the slowdown in China does not look fatal,just flat.

There is plenty of juice in the tank for expansion yet, especially with interest rates so.

Bumps yes, recession no. However, the asset bubble caused by low rates will lead to a bust a lot sooner than people think. Also, post election there can't be any more affordable stimulus and that will begin to bite quite quickly.

Property is definitely under-taxed. Council tax is a tax on occupancy: if you rent a property you pay the tax, and not the property owner as was the case with the old rates. Still, it's better than nothing. And yes, I know about poor widows living in huge mansions but anyone who has bought a home since the 1970s has enjoyed huge tax-free capital gains (or they will when they sell up).

DJK - And once they capitalised their gains they'll be means tested out of various benefits in old age. We must be careful not to discourage independence.

My council tax increased by £500 on upisizing a bit. I don't notice any difference in the services provided. The wheelie bin capacity is the same despite the fact that we have another person living with us.

EK: You know, of course, that most local government is paid for and directed from Whitehall. It's cr@p because there is little freedom or accountability. Moreover, because council tax is a small proportion of revenue, there is a gearing effect where the pain inflicted by tax raises is much greater than the extra revenue as a proportion of the whole.

DJK/ Ek - just ordered new council bin bags which business are required to buy. £4.40 a BAG.A single, flimsy, crappy bin bag, that even the Tesco super saver range would not dare to market as they are so thin as to be almost transparent and useless for putting any waste into.

£4.40 + vat for a single bin bag.

Anyway, simple warning. If you give the councils the ability to raise revenue they will. And it will never come down. Salaries will go up. Pensions will go up in the public sector. But services will be based on the cheapest possible quote.

You have only to look back to the 70s and 80s of the loony left councils to see the damage at the local level.

@CU - "overseas investment into London. neither of which too much can be done about" - now thats just not true, CU. Overseas owners do not pay CGT which is a vicious attack on personal property and UK nationals and the willful promotion of corporate ownership of land and tax-avoidance. Personal property is indeed the cornerstone of UK law and should be defended at every turn. However Corporate ownership of land and/or ownership of land by overseas/non-UK taxpayers should be prohibited or at the very least severely curtailed.The building companies have morphed from construction into gambling on the price of land banks. The buy and withold land from the market becasue doing so allows them to mark it up in value by the very act of doing so. They are using the very basis of the state to create chortage and generate profit. This isnt capitalism, this is oligarchy. And, if you assume that its occuring with the connivance of the state, as I do, then surely [i]this[/i] is a picture perfect definition of communism.

LVT is a brilliant idea; allow the landowner to declare the price of their property and tax them at a commensurate rate. What could be more libertarian than allowing the individual (not the corp, mind) to choose their own tax rate. The quid pro quo would be that the ownder could not sell the property for a higher price.

It is ludicrous for government to continue to tax Labour, Capital and Enterprise yet refuse to tax Land. It is an aggregious affront to democracy (soi disant) and capitalism to refuse to tax land, promoting scarcity and ramping values. We are returning, by design of both parties, to a neo-feudal system and it must be opposed by all intelligent people.

land banks - where are these mythical land banks then...try looking at the property co's they have developed their land banks now.They acquired them in the recession and are now building them out as fast as they can. That's capitalism.

You also cant hodl resi property through a foreong co any more wihout paying 15% tax - that loophole is gone.

LVT is a terrible idea, if you can't afford the tax then the government confiscates your land. As I said, communism.

land banks - where are these mythical land banks then...try looking at the property co's they have developed their land banks now.They acquired them in the recession and are now building them out as fast as they can. That's capitalism.

You also cant hodl resi property through a foreong co any more wihout paying 15% tax - that loophole is gone.

LVT is a terrible idea, if you can't afford the tax then the government confiscates your land. As I said, communism.

1. You cant just go round shreiking "Communism! Communism!" without telling us why. Why is LVT more or less communist than PAYE or VAT?(Incidentally this 'LVT' should also apply to Art, Classic Cars, Wine, etc...) Stops hysterical bubbles happening and puts money to productive work at a low,low rate for new businesses.

2. Are you saying that the development co.s have developed all their land? Thats not even nonsensical. Land banks have grown massively in the past few years.

Your position on this is quite far from reality and I dont think I'm the only one who thinks it.